Declan plans to open up three Pizza Pals franchises in the greater Phoenix area.

Question

Declan plans to open up three Pizza Pals franchises in the greater Phoenix area. He tells you that he plans to negotiate with the franchisor to get rid of the giant Preston the Pizza that sits on the roof of all Pizza Pal restaurants. Declan is likely to learn that

Multiple Choice

the parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs.

he is making a smart decision because it is not the sign that will bring customers to his pizza joint. It is the wide selection of toppings and six different crust offerings that keep the customers coming in.

it is nonnegotiable due to company rules.

Explanation / Answer

Answer: It is non-negotiable due to company rules.

Explanation: In a franchisor-franchisee relationship, it is the franchisor who makes the rules and terms and conditions for the franchise to follow and abide by them at all times. Declan wishes to open up Pizza Pals franchises in the greater Phoenix area but does not want to incorporate the giant preston the pizza that sits on the roof of all Pizza Pal restaurants. Declan must understand that the brand elements such as logo, signs and other marketing materials are important for the success of a food chain and it helps in creating a brand recall in the minds of the prospective customers. Declan will learn that getting rid of the brand elements of a franchise is usually non-negotiable in majority of the franchises due to company rules.

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